Microsoft Office For iPad Faces Many Challenges

Microsoft can still win with an iPad version of Office, but only if the touch interface is exceptional.

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Retiring Microsoft CEO Steve Ballmer confirmed this week during a talk at the Gartner Symposium that a native version of Microsoft Office is coming to the iPad. There's a legitimate argument that Microsoft has hurt itself by waiting this long. But with Ballmer promising a revamped, touch-oriented UI rather than the sort of simple port found in Windows RT, Microsoft could still win big with Office on the iPad -- as long as the new interface is exceptional.

In an email interview earlier this month, Forrester analyst David Johnson summarized the challenge Microsoft faces in arriving so late to the game: "Microsoft's strategy of not delivering a useful Office product on iOS, ostensibly to preserve the Windows franchise (but also probably because it's a significant engineering effort) is limiting the freedom of consumers to choose the devices and operating systems that they want."

Johnson added that because natively using Office on a tablet demands embracing Windows 8 or Windows RT, many are simply exploring Office alternatives.

These alternatives pose a limited but significant threat. Office will remain the enterprise productivity standard for the foreseeable future, so a large user base is sure to greet an iPad-optimized version, whenever it arrives. But consumer adoption, and thus BYOD implications, could be another story.

Apple is now offering free downloads of its iWork suite with the purchase of new iOS devices, for example, a move that is surely increasing the Office competitor's market share by leaps and bounds. Analysts told InformationWeek last month that although iWork isn't an Office-killer, it could still disrupt Microsoft's monopoly; documents might originate in the workplace via Word or Excel, but as soon as an employee wants to peruse or modify those documents at home, they could easily end up in iWork.

Make no mistake, Microsoft still stands to earn billions from the eventual release. But by waiting, it also might have left billions on the table. If the company had already released an iPad-optimized version of Office, its market position would likely be unassailable across all platforms, from mobile to desktop to the cloud. Revenue from mobile-friendly Office 365, already increasing at an impressive clip, might also be higher, which could in turn feed Windows Azure and other emerging profit streams. Microsoft might have been forgiven for leaving these opportunities untapped had its Office strategy motivated sales of Windows tablets -- but that hasn't yet been the case.

The alpha variable is how good Office on the iPad will be. As Johnson noted, creating a touch-oriented Office UI is a significant engineering challenge. Ballmer lightly alluded to as much at Gartner's event.

For all the radical interface changes in Windows 8, much of Microsoft's sales pitch has involved treating tablets more like laptops, rather than -- like Apple -- treating them as a distinct tool. Excluding the obvious difference in screen size, using Office on a Surface tablet is basically the same as using it on a desktop. Microsoft should be farther into the process than it is, but it's still encouraging to hear Ballmer emphasize the importance of creating a new interaction model.

If IT wants to enable Office on an iOS device right now, it can only do so natively on the iPhone, and that requires Office 365. You can use the app on an iPad, but that involves upsizing the iPhone-sized screen, which degrades image quality, or using only a tiny portion of the iPad screen, which isn't useful. The native iPad app will be beneficial to both IT and consumers in that it overcomes these problems without forcing people to use Microsoft's web apps, which are mostly fine but won't replace a native offering for a lot of users.

The app will no doubt still be included in Office 365 packages, and that alone might be good enough for some companies. But unless it's a great version of Office, consumers aren't going to be interested. Even if it is great, consumers might not be swayed if they have to sign up for a full 365 subscription. That's why I think Microsoft needs to not only have a realistic pricing model independent of Office 365 but also a UI that blows away free competitors. iPad users who want to use productivity software on their tablets are already getting used to Office alternatives; by the time Office for iPad rolls around, Apple will probably have had nearly a year to condition users toward iWork. Once people get used to something for free, they need a reason to start paying for something similar.